IRS Could Face Budget Cuts

New York Times writer Alan Rappeport reported last week that, “President Trump has a rocky history with the Internal Revenue Service, which he has complained audits him with unfair ferocity. Now he wants to significantly cut the tax agency’s funding at a time when it has already been bleeding staff and struggling to keep up with a flood of returns ahead of Tax Day.

“The plans, revealed this week in documents associated with the White House budget outline, put Mr. Trump at odds with his Treasury secretary, Steven Mnuchin, who has argued that the I.R.S. needs more money and a larger staff.

“Another round of cuts, tax experts say, could put one of the few federal departments that pay for themselves on life support.”

The Times article noted that, “The White House budget office has proposed a 14.1 percent cut to the I.R.S. for the fiscal year that begins in October, reducing the agency’s budget to $9.65 billion; six years ago, it stood at $12.1 billion ($13.6 billion when adjusted for inflation).

“If approved, the cuts would happen when the number of audits is down and customer service complaints are up as a result of the drop in funding.”

Mr. Rappeport pointed out that, “Promising to modernize a Treasury unit that many conservatives have threatened to abolish, Mr. Mnuchin said he was certain that Mr. Trump understood the concept of ‘we add people, we make money.’ Investing in the I.R.S., Mr. Mnuchin suggested, was a smart move because the agency’s work ultimately paid for itself through the revenue that it brought in.

“The White House, it seems, has other ideas.

“The potential reduction in I.R.S. funding is the latest example of potential division within the Trump administration’s economic team, which has wrestled with how to cut taxes, invest in the military and lower the debt at the same time.”

The Times article added that, “Handicapping the agency with additional budget cuts will make matters worse, experts say, emboldening scofflaws to take their chances against an increasingly toothless tax collector. And as funding continues to fall, honest taxpayers are suffering from a lack of attention.”